The dollar returns to the growth path




The administration of Donald Trump has presented the long-awaited tax reform plan. The new perception of the tax structure is designed to greatly reduce the tax burden weighing on companies and households and, in the long term, contribute to economic growth. In particular, it is intended to reduce the profit rate of 35% to 20%, introduce a new rate for businesses «pass-through «companies» of 25%, and reduce the tax burden «for the rich» to 39.6% to 35%.

In addition, the plan includes measures such as the cancellation of the tax on the succession of the family business, the accelerated depreciation of capital investments and the change in the principle of levying the duty of the international to the whole of the territory. These measures, such as the White House hopes, will lead to an acceleration of capital repatriation.

At the same time, the plan did not contain calculations to assess the effectiveness of the new measures and, therefore, is just a call for a wide debate in the Congress. As a result, the strong demand for the dollar Wednesday, may be only temporary.

Of the euro area

Ifo index, given the state of the business climate, declined in September to 115.2 p against 115.7 p a month earlier, the forecast of growth of small size. A decrease in the index may indicate that the pulse of activity in the euro area is slowing, which may serve as a signal for a break-through in the euro rally.

The spokesperson of the ECB Kere said that the bank was not «frightened» by the need to reduce the asset purchase program, but has the intention to carry out this process with caution. The President of the ECB Mario Draghi has confirmed, on Monday, the policy of gradual reduction of the program, noting that it is necessary to strengthen the inflation with the economic recovery and, therefore, monetary regulation remains in demand, to a large extent.

The ECB is trying to bring down the wave of demand for the euro, and it seems that he succeeds. With the revival of the bulls in the dollar, we can expect that the correction will continue, a decrease to 1.16 remains a priority for the scenario in the short term.

United Kingdom

Given the lack of macro-economic and political news, the book took a short break. The incoming signals are contradictory, the probability of a rate increase by the Bank of England is still the dominant idea and is in favour of the bulls, but the momentum of growth has slowed markedly.

In favour of the fact that the BoE will raise the rate in November, shows in an unexpected way the growth of retail sales. According to the Confederation of British Industry (CBI), the retail trade index rose strongly in September to + 42p counter-10p in August. It is expected that in October, the strengthening of retail will continue this indicates a strong consumer activity and the growth of inflationary pressures.

At the same time, the volume of consumer loans has increased at the slowest pace in at least 5 months in August, the growth was 1.5% compared to 1.9% in July, the weakness in growth reflects the concerns of households regarding the financial future.

The book is likely to continue its technical decline of support 1.2920 / 90. To boost growth, a new driver is needed, which can be a good report on consumer spending and mortgage lending in August, which will be published on Friday.

Oil and the ruble

The price of oil have renewed two years because of the fear of a lack of supply in the middle of the global economic recovery. The trend has all chances of development, because the «Trump factor» comes into force, which will contribute to the growth of the energy demand.

In russia, the GDP growth in August, according to the Ministry of Economic Development, increased 2.3%, the unemployment rate at historically low levels, inflation under control. There are no reasons for the weakening of the Russian currency, however, an expensive dollar may play a role. Nevertheless, the ruble forecast is optimistic, there is no reason for a strong collapse, the USD/RUR movement to the north will be moderate and slow down near the technical resistance level of 58.20 / 58.70.



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